Caustic soda price hike is on the horizon
By Purchasing Staff -- Purchasing, 8/29/2007 10:13:00 AM
Caustic soda prices have been bobbing around a $343/metric ton price average for four months now and researchers at subscription newsletter ICISpricing.com and Wall Street brokerages report that pricing is entering the Labor Day weekend stable despite strong demand and tight supplies. However, buyers can expect a $25-50 price hike sometime in the fourth quarter, says analyst Don Carson at Merrill Lynch & Co. in New York. (Dow Chemical has already issued a caustic soda price increase this week.)
Analysts note that overall spot activity for caustic soda has been healthy but supply has been—and may continue to be—constrained by limited product availability and transportation bottlenecks which have made securing rail cars and barges extremely difficult. Delivery leadtimes, in fact, have averaged 14 weeks, about twice what they usually are, for the past several months, according to Purchasingdata.com
The price-hike proposal could be lower, though, because demand is starting to wobble. Carson acknowledges that “some producers have reported that overall demand, while still healthy, has pulled back from the near-sold out levels seen earlier in the summer.” However, there is a chance the hike will stick because demand for polyvinyl chloride is backing off, chlorine producers are pulling back on their capacity utilization rates. “This, in turn, should result in renewed tightness in the caustic soda market,” says Carson.
In market supply news, caustic soda producer PPG of Pittsburgh unveiled a converted Lake Charles, La., plant in Louisiana after a two-year, $100 million project to switch the plant from mercury to membrane cells. The firm says the membrane unit will have about the same production capacity as the mercury unit, about 249,500 metric tons/year, but will use 25% less electricity. Meanwhile, chemical distributor Harris & Ford of Indianapolis will begin producing its own caustic soda and hydrochloric acid once a new plant in Iowa is completed in 2009. The plant will be capable of producing about 100,000 dry short tons of caustic soda and 250,000 short tons of hydrochloric acid per year.
Caustic soda prices drop back down in March
03/18/2009Caustic soda price dips, but it’s still high
02/08/2009Caustic soda prices continue to plunge
07/14/2009Caustic soda price increase gaining momentum
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